Critics point to flaws in US reporting criteria

Friday, 20 September 2013 18:17 | | |

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(Burma Times) Yangoon – When they were unveiled in May, the United States government’s Burma Responsible Investment Reporting Requirements were touted by Washington as the cornerstone of the Obama Administration’s policy for transparent business reengagement with Myanmar.

However, just a handful of reports have been filed on the US embassy’s website and the requirements have drawn the ire of both businesses, which see them as an unnecessary hurdle, and human rights groups, which say they are not stringent enough to ensure US businesses respect human rights.

“For larger firms it may be less of an issue, but for smaller firms, the cost of time and resources necessary to comply can be considerable, and could be a deterrent to new investment,” said Lisa Burgess, spokesperson at the US Chamber of Commerce, which has opposed the reporting requirements and lobbied against them since they were first announced.

Yet despite displeasure from both sides, The Myanmar Times understands that no further changes to the reporting requirements are being considered. Two public comment periods were held last year prior to the first reports being posted on July 1.

The reporting requirements stipulate that US companies report new investment in Myanmar exceeding US$500,000 and any investment made with the state-owned Myanma Oil and Gas Enterprise (MOGE).

Payments of $10,000 made to the Myanmar government, related agencies or officials all need to be flagged, along with the purchase of property or any contact with the Tatmadaw. Companies also need to outline steps being taken to respect workers’ rights and the environment.

Companies submit two versions of the reports – one that is made public and a second version that may contain sensitive information, like trade secrets, and is kept by the State Department.

Both reports are reviewed by officials at myriad offices within the US State Department, including the Bureau of Democracy, Human Rights and Labor, the Bureau of Economic and Business Affairs, the Bureau of East Asia Affairs and the Office of the Sanctions Coordinator. The State Department can ask for more information or clarification if it deems it necessary.

After being reviewed, the public reports are then posted on the website of the US embassy in Yangon. Annual reports are due 180 days after the $500,000 investment mark is surpassed and thereafter each year on July 1. To date just five reports have been posted – all on the first two days after the reporting system was launched.

But US business organisations say that the reporting requirements are an unnecessary obstacle for smaller firms but will not hold back large companies, such as Coca-Cola or General Electric, which have both ramped up their business in Myanmar in the past year. (Neither responded to repeated requests for comment.)

A spokesperson at the US-ASEAN Business Council told The Myanmar Times that it believed the requirements “represent a particular burden to smaller companies that may look to make the jump [to Myanmar]” that could effectively stall or fully prevent companies from making even small investments.

In contrast to these business organisations, rights groups say that the reports have thus far failed to provide adequate information regarding companies’ activities.

In a joint letter to President Barack Obama, 27 Myanmar rights groups, including Human Rights Watch, Institute for Asian Democracy and Physicians for Human Rights, urged the administration to force companies to include more data in the reports to address what they described as “serious informational gaps”.

Four specific shortcomings were highlighted in the letter based on an examination of the five reports released publicly to date.

The groups called for further disclosures from “passive” investors, who are not required to report on details of worker rights, anti-corruption, and environmental policies and procedures. Rights groups feel that this distinction could lead to companies skirting requirements.

“If all investment funds with a ‘passive’ relationship to their Burmese investment targets were to take the same position, U.S. capital could flood high-risk sectors – such as extractives, plantation agriculture, and infrastructure development – without providing the transparency needed to ensure that these investments are not in fact harming U.S. foreign policy interests,” the letter warned.

The groups said they were also concerned by the lack of a requirement to identify Myanmar partners, the failure of at least one company – Crowley Marine Services – to publish policies and procedures related to human rights, the environment, labour, land acquisition and corruption, and the need for proper tracking of investment to ensure reports were made when the $500,000 threshold was met.

“Companies should not be lulled into thinking that meeting them [reporting requirements] is sufficient,” said Lisa Misol, a senior researcher on business and human rights at Human Rights Watch. “[Companies] will have to go much further to truly grapple with the human rights risks they could confront.”

Two investment funds that have already submitted reports, Capital Bank and Trust Company and Capital International Inc, described themselves as “passive” investors for the purposes of the reporting requirements.

In a statement to The Myanmar Times they said that, “Any human rights issues that may affect companies are considered by our investment professionals as part of the investment management process.”

Crowley Marine Services did not respond to repeated requests for comment. Hercules Offshore, which has also submitted a report, responded to initial emails but not to questions submitted by The Myanmar Times.

Advocacy group EarthRights International reiterated many of the problems outlined in the letter from human rights groups in its own evaluation of the public reports in July. It said that while the group was pleased to see the US dictate such requirements they “leave much room for improvement”.

Paul Donowitz, ERI’s campaign director, said the lack of penalties for companies that fail to meet the reporting requirements was yet another problem that could undermine the system. “Penalties or other consequences for failure to comply with the rules should be found in the rules,” he said. “[T]his is a major shortcoming.”

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